There is a step that asks if lilo should be installed to your mbr. Say NO to that one. This does not really matter, because once installed you can switch to grub (overwriting lilo in the mbr) really easily, "grub-install".
If I want to use Grub as my bootloader, what should I do during the hdsintall process so that linux doesn't setup the loader automatically? Like which steps should I say "No" to?
There is a step that asks if lilo should be installed to your mbr. Say NO to that one. This does not really matter, because once installed you can switch to grub (overwriting lilo in the mbr) really easily, "grub-install".
i did grub-install dev/hda , according to the readme, but it says the filesystem is read-only. Thats obvious because I am running from my cd.
So how can I install grub to my linux partition. I saw that root-directory parameter, but I am not sure how to use that.
Just mount it read write (dunno which version you're using, but I'm pretty sure there is a little clickeable icon on the live CD somewhere in the Kde desktop to enable that). Then do
grub-install dev/hda
Alternatively, take a peek at this thread:
http://www.knoppix.net/forum/viewtopic.php?t=5623
The linux partition is mounted.
the partition is hd6, so when I do grub-install dev/hd6
it stills says "cannot create directory `/boot/grub': Read-only file system"
I'm using knoppix 3.3
You want to use grub as your boot loader, but to boot what? If you are running linux off a CD only then you dont need the boot loader.

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